Book Review: An Introduction to Green Homes

The Appraisal Institute’s An Introduction to Green Homes is yet another valuable tool from the Institute, paving the way for appraisers to handle green home assignments. The book, authored by long-time appraiser, REALTOR, and educator Alan Simmons in 2010 helps appraisers new to this work “know what they don’t know.” The book equips appraisers to identify green building certifications, techniques, and products and guides them to great resources for more details. The all-important last chapter shows how an accurate description of a green property can be translated into standard appraisal forms, and employed into three different appraisal analyses and three different approaches to calculate value.

But if you think this book is only to prep appraisers, you are missing the whole point! An Introduction to Green Homes is a 100% permissible cheat sheet for builders and contractors. It spells out in a clear fashion what appraisers are looking for and how they calculate value. By starting with the end in mind, builders and contractors can document their work and be proactive about preparing for an appraisal. Whether it’s a builder selling his own product or a contractor helping a client be prepared, well-managed appraisals better reflect market interest and drive future demand for green homes.

Since the book title references green homes, the same term is used in this review. But the ideas and some subsequent chapter names also apply to high-performance homes, deep retrofits, and remodels.

For appraisers, the book covers major green building programs, an overview of common green products and general concepts for green remodeling. The last chapter highlights the practical application of this information into appraisal forms and calculations. A key point for appraisers—the economic benefits of green building—is buried in the introduction chapter and would have worked better as a stand-alone topic. An opinion of value is issued whether an appraiser understands green issues or not! So a strong understanding of green impacts seems critical. Also, topics such as house-as-a-system, and typical products and measures would be easier to process for the green home novice if they were defined in a benefits section instead of being buried in chapters on certifications and remodeling.

The practical examples are outstanding with snapshots in the book text and full examples in the appendix. Detailed examples help the appraiser understand what makes these homes unique, what to look for and how to identify “green-washing.” They include:

Sample of an Energy Star thermal bypass checklist

HERS index background

Case study on how a home achieved LEED Silver

List of websites to confirm for green product qualities

List of five top energy-saving measures, plus other common features

For builders and contractors the book is a treasure trove of enlightening details. For example, did you know…

Appraisers are told to look for a blue Energy Star for New Homes sticker in the electrical panel box?

There’s just one tiny box for energy efficiency on the Uniform Residential Appraisal Report?

The book’s last chapter, called Green Appraisal Issues is a must-read for every builder and contractor. The chapter provides an insider’s look at what appraisers are hired to do on a green assignment and their very precise and complicated data needs. The step-by-step descriptions and sample forms will give builders and contractors a clear picture of how they can support an accurate description of the properties they build or improve. Market Analysis section includes questions appraisers must understand about local green home demand and Property Description and Analysis shows how appraisers have the herculean task in tiny fields of making every character count to make a defendable case that a green home is a better one. The Cost Approach section clearly spells out why appraisers need modeled payback estimates in a great case study. Sales Approach highlights how resources like the HERS index create consistent comparisons and are applied in opinions of value.

It is important to note that this book was published before the Appraisal Institute released its Green & Energy Efficiency Addendum as the work-around to the pithy appraisal forms already mentioned. Luckily, the concepts in the book can also be applied to the Addendum. The existence of that enhanced tool now means there is a more consistent way for appraisers to build and defend the case for green value—and more demand for better information from builders and contractors to do so.

Builders and contractors will find An Introduction to Green Homes a must-read and an eye-opening overview for why their documentation is the critical starting-point for any effective green home appraisal. You’ll never think of an appraisal the same way after reading this book and it’s guaranteed to help you cultivate better interactions with appraisal professionals, helping them improve the quality of their work. That in turn better reflects market interest for your work—and drives future demand!